Tag: DEI

What Does IBM’s $17 Million FCA Settlement Portend for Government Contractors Wrestling with Compliance?

Jennifer A. Short, Dominique L. Casimir, Brooke T. Iley ●

On Friday, April 10, 2026, the Department of Justice (“DOJ”) announced a $17 million False Claims Act (“FCA”) settlement with International Business Machines (“IBM”), based on the company’s alleged violations of federal anti-discrimination laws. The settlement is the first under the DOJ’s Civil Rights Fraud Initiative, created last May with the objective of investigating and prosecuting “illegal DEI” practices, primarily through an FCA lens. Coupled with a new Executive Order—issued on March 26—that imposes contract prohibitions on “racially discriminatory DEI activities” in federal government contracts and subcontracts, the IBM settlement signals an escalation in the government’s focus on DEI programs and employment policies.

The DOJ Press Release and Settlement Agreement

The Alleged “Covered Conduct” Identifies Specific Problematic Practices. 

DOJ alleged that IBM improperly made employment decisions based on protected characteristics through specific programs and actions, described as the “Covered Conduct” for purposes of the settlement agreement:

  • Compensation Incentives: A “diversity modifier” linking bonus compensation to demographic targets
  • Hiring and Promotion Criteria: Basing interview eligibility or prioritization on race, sex, or national origin
  • Demographic Goals for Business Units: Developing race and gender targets tied to employment decisions
  • Limited-Access Programs: Limiting training, mentoring, and leadership development to employees meeting specific demographic criteria, such as minorities.

To read the full alert, please visit our website.

DEI Litigation Whiplash: Appellate Court Allows the Government to Move Forward with Challenged DEI-Related Executive Orders

Brooke T. Iley and Dominique L. Casimir ●

Uncertainty for companies when making business decisions is a new norm. Tariffs aren’t going to be the only thing that is on again and off again. The same is happening with directives governing diversity, equity, and inclusion (“DEI”) initiatives. In the first two days of President Trump’s second term, he signed two DEI-related executive orders (“EOs”), EO 14151 (Ending Radical And Wasteful Government DEI Programs And Preferencing) and EO 14173 (Ending Illegal Discrimination And Restoring Merit-Based Opportunity). While they were in effect, these EOs caused widespread concern throughout the public and private sector as entities scrambled to understand the implications for their businesses. Approximately a month later, a federal judge in Maryland issued a preliminary injunction that stopped the government from implementing key provisions of the two EOs. However, the tide turned on Friday, March 14, 2025, when a three-judge panel from the U.S. Court of Appeals for the Fourth Circuit granted the government’s motion to stay the injunction pending appeal. This ruling empowers the government to resume the implementation of EO 14151 and EO 14173.

While the preliminary injunction was in effect, the government was precluded from (1) terminating “equity-related” contracts and grants pursuant to EO 14151, (2) requiring that government contractors and grantees sign a DEI certification pursuant to EO 14173, and (3) bringing any False Claims Act (“FCA”) or other enforcement action premised on the DEI certification. (As we have previously explained, the certification requirement in EO 14173 is intended to deter contractor and grantee DEI-programs by invoking the specter of FCA liability.)

Now that the injunction is stayed, an emboldened government will likely move swiftly to terminate contracts and grants that it views as being “equity-related” and to require contractors and grantees to execute the DEI certification. We have previously recommended general steps that contractors and grantees can take as they navigate a rapidly changing environment in which the president signs new EOs almost daily. Below, we offer recommendations specific to the government’s renewed ability to implement the previously enjoined provisions of the DEI-related EOs.

Read the full client alert on our website.

Court Temporarily Hits the Brakes on EO 14173 Ending Illegal Discrimination: What Employers Should Know

 Anthony B. Haller, Brooke T. Iley, and Theresa A. Topping ●


Big Picture

On February 21, 2025, a federal judge in the District Court of Maryland granted a temporary injunction blocking portions of President Trump’s Executive Orders “Ending Illegal Discrimination and Restoring Merit Based Opportunity” (“14173”) and “Ending Radical and Wasteful Government DEI Programs” (“14151”) (collectively the “EOs”). To learn more about each EO’s directives read Blank Rome’s previous coverage on 14173 here and 14151 here. This is a temporary nationwide ban on certain portions of the EOs.

After pointing out that the Trump Administration has declared “DEI to be henceforth illegal”, the Court found the EOs do not “define any of the operative terms” such as “illegal DEI”, “equity-related”, “promoting DEI”, or “illegal discrimination or preferences”. This vagueness fails to provide companies and organizations with proper notice as to what types of programs are prohibited. Further, the Court found that the EOs likely violate the First Amendment by expressly threatening “the expression of views supportive of equity, diversity and inclusion.” This is a nationwide ban.

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Steps Employers Should Take After President Trump Revoked Executive Order 11246

 Anthony B. Haller and Theresa A. Topping ●

On January 21, 2025, President Donald Trump issued an Executive Order (“EO”) titled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” explicitly revoking Executive Order 11246, which  mandated federal contractors comply with certain diversity, equity, and inclusion (“DEI”) related requirements, including the dissemination and enforcement of nondiscriminatory policies, establishing a written affirmative action plan and placement goals for women and minorities, and implementing action-oriented programs for accomplishing these goals.

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